G.R. No. L-78604 May 9, 1988
BATAAN SHIPYARD AND ENGINEERING CO., INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, HON. FRANCISCO JOSE, JR., HON. VLADIMIR P. L. SAMPANG, JOSE G. CRUZ and NATIONAL FEDERATION OF LABOR UNIONS, respondents.

FACTS

Petitioner Bataan Shipyard and Engineering Co., Inc. (BASECO) filed an application with the National Labor Relations Commission (NLRC) for the retrenchment of 285 employees, citing heavy financial losses. During the pendency of this application, the company retrenched certain employees who had been on sick leave. All of these initially retrenched employees were officers and members of the private respondent labor union, NAFLU. The union opposed the retrenchment application, and the retrenched employees joined as individual complainants. The Executive Labor Arbiter declared the retrenchment itself legal and valid but found that BASECO discriminated against NAFLU members in selecting whom to retrench. Consequently, the Arbiter ordered the payment of separation benefits but also found BASECO guilty of unfair labor practice, imposing a penalty of six months’ backwages for each affected employee.
BASECO appealed to the NLRC, challenging the unfair labor practice finding and the backwages award. The NLRC affirmed the Arbiter’s decision, noting the company’s failure to satisfactorily explain why all retrenched employees were NAFLU members and concluding that the selection was discriminatory due to their union affiliation. BASECO then elevated the case to the Supreme Court via a petition for certiorari, arguing that the NLRC committed grave abuse of discretion in finding unfair labor practice when the retrenchment was declared valid.

ISSUE

Whether the National Labor Relations Commission committed grave abuse of discretion in finding BASECO guilty of unfair labor practice despite the validity of the retrenchment program.

RULING

The Supreme Court dismissed the petition, ruling that the NLRC did not commit grave abuse of discretion. The Court affirmed the legal distinction between the right to retrench and the manner of its exercise. While the financial necessity justifying the retrenchment itself was not disputed, the implementation of that management prerogative must be free from abuse of discretion and must comply with due process, as employment is a vital means of livelihood. The Court found substantial evidence supporting the NLRC’s conclusion of discrimination. The record showed that all retrenched employees were NAFLU officers and members, and BASECO failed to provide any credible guideline or explanation for this selective targeting, such as criteria based on efficiency, physical fitness, or seniority. This uniform targeting of union members constituted interference with the employees’ right to self-organization, which is defined as an unfair labor practice under Article 249(a) of the Labor Code. Therefore, a finding of valid retrenchment does not immunize an employer from liability for unfair labor practice if the implementation is discriminatory. The penalty of backwages was sustained as a consequence of the unlawful discriminatory act.